There are a number of reasons for the rise in insurance rates.
Inflation. While inflation continues to slow, with rates edging down to 4.3% in March, it still impacts your car insurance premium as insurers need to adjust their rates to keep up.
Busier roads. There are more drivers on Ontario roads as workers return to the office since the lifting of pandemic restrictions. More drivers mean more accidents, making payouts more likely for insurers.
High car prices. Car prices are currently very high. In the first quarter of 2023, a new car cost $61,000, up from $45,000 in 2021. A used vehicle cost $39,000 up from $26,000. While there are several factors for this upward pressure, two main ones top the list: A tight supply of cars and a shortage of semiconductor chips, needed for safety features such as airbags and brakes.
Rate changes. The Financial Services Regulatory Authority of Ontario (FSRA) is responsible for ensuring that car insurance rates are fair and reasonable. Due to inflation and people driving more, the FSRA has already approved rate increases of up to 15%, with the average uptick sitting at 6.5%. If you’re affected by an increase, expect to pay more at renewal time.
Car theft. How often your car’s make and model is stolen is one of the factors insurers use to set your insurance premiums. According to the Insurance Bureau of Canada (IBC), car theft is on the rise with a vehicle stolen every 48 minutes. Every year, Équité Association, a national anti-insurance fraud and crime not-for-profit, publishes a list of Canada’s 10 Most Stolen Vehicles. Number one on the most recent 2021 list: The Honda CR-V.
Insurance fraud. When another driver intentionally causes an accident for the payout, or claims injuries are much worse than they actually are, that’s insurance fraud. And according to the IBC, it’s a significant contributor to rising premiums, costing Ontario policy holders over $1 billion each year, or $236 per insured vehicle.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.